U.S. stocks gapped higher at the open today and the Dow Jones Industrial Average traded as high as 12,475, which is a new high for 2011. The NASDAQ traded as high as 2802.99 still below its February 18th high at 2840.51. Existing Home Sales rose by 3.7% to an annual rate of 5.1 million units. Forty percent of sales were distressed properties. The average price of a home was down 5.9% year over year.
Strong U.S. earnings reports, most notably from Intel (INTC) after the close on Tuesday set into motion a strong rally in both Asia and Europe. The Nikkei 225 gained 1.8% to 9607. On Tuesday, U.S. stocks posted just modest gains of 65 points on the Dow Jones Industrial Average to 12,267, well above its 50-day simple moving average at 12,189. The NASDAQ tacked on 10 points to 2745 below its 50-day at 2754. U.S. stocks gapped higher at the open with the NASDAQ well above that 50-day simple moving average.
The U.S. Treasury 10-Year yield rose from 3.360 to 3.410 on Wednesday, but this slight rise still reflects that a modest flight to quality bid is trumping the S&P downgrade of the outlook for U.S. debt. Gold traded to another new all time high on Wednesday at $1506.2 the Troy ounce then closed on the cusp of $1500.0. Crude oil continued the rebound from Monday’s low of $105.50 per barrel spiking to $111.66 at Wednesday’s high.
The euro versus the dollar traded from just below 1.42 on Monday to above 1.45 with a new year to date high of 1.4546 on Wednesday.
EnCana (ECA) reported Q1 EPS of $0.02, which may not be comparable with consensus of $0.15. Kinder Morgan (KMI) is initiated with an Outperform and $33 price objective at Morgan Keegan. In afternoon trading: Shares of Golar LNG (GLNG) are up about 17.5%. Shares of BPZ Resources (BPZ) are up about 6.25%.
The Energy Select Sector SPDR (XLE) was trading at $78.62 at 4:00 PM on Wednesday, up 2.36% on the day – up 15.19% year-to-date.
Jaguar Mining (JAG) is moved to Overweight from Neutral at JP Morgan. In afternoon trading: Shares of Albemarle (ALB) are up about 12.25% after beating estimates by 19 cents and revenue by $61M. Shares of Jaguar Mining are up about 6.5%. Shares of Crown Holdings (CCK) are down nearly 5%, despite beating estimates by 6 cents with revenue in-line with estimates.
The Materials Select Sector SPDR (XLB) traded at $40.02 at 4:00 PM on Wednesday, up 1.32% on the day – up 4.19% year-to-date.
Shares in Air Lease (AL) rose 5.5% to $27.95 on their NYSE debut yesterday in a sign the air-leasing sector, which lends aircraft to airlines, is recovering from the financial crisis. Eaton (ETN) beat estimates by 4 cents and revenue by $80M. Textron (TXT) missed estimates by 7 cents and revenue by $30M. United Technologies (UTX) beat estimates by 6 cents and revenue by $490M. CSX (CSX) beat estimates by 2 cents and revenue by $60M. Hub Group (HUBG) missed estimates by a penny, but beat revenue by $18M. Canadian National Railroad (CNI) is raised to Outperform from Market Perform at Raymond James. In afternoon trading: Shares of Trimas (TRS) are up about 12.25%. Shares of United Rentals (URI) are down nearly 11% after missing estimates by 20 cents and revenue by $18M.
The Industrial Select Sector SPDR (XLI) traded at $37.52 at 4:00 PM on Wednesday, up 1.63% on the day – up 7.60% year-to-date.
Wynn Resorts (WYNN) beat estimates by 65 cents and revenue by $100M. Lamar Advertising (LAMR) is lifted to Buy from Hold at The Benchmark Company. Lumber Liquidators (LL) is now Sell from Neutral at Janney Montgomery Scott. In afternoon trading: Shares of Autoliv (ALV) are up about 7% after beating estimates by 16 cents and revenue by $80M. Shares of Hanesbrands (HBI) are up about 6.75% after beating estimates by 16 cents and revenue by $30M. Shares of TiVo (TIVO) are up nearly 35% after a US appeals court agreed that Dish Network Corp. (DISH) is violating a judge’s order to shut down parts of a digital-video recording service that infringe a TiVo patent.
The Consumer Discretionary Select Sector SPDR (XLY) traded at $39.69 at 4:00 PM on Wednesday, up 1.80% on the day – up 6.09% year-to-date.
Altria Group (MO) reported Q1 EPS of $0.44 (in-line) and beat revenue by $50M. Sanderson Farms (SAFM) is raised to Buy from Hold at Jefferies with a new target of $55. In afternoon trading: Shares of Synutra International (SYUT) are down about 6.5%. Shares of Reckitt Benckiser Group (RBG) are up about 6.25%. Shares of Farmer Brothers (FARM) are up about 5%.
The Consumer Staples Select Sector SPDR (XLP) traded at $30.89 at 4:00 PM on Wednesday, up 0.52% on the day – up 5.39% year-to-date.
Elan (ELN) beat estimates by 4 cents and revenue by $13M. Intuitive Surgical (ISRG) beat estimates by 10 cents and revenue by $7M. Stryker (SYK) reported Q1 EPS of $0.90 (in-line) and revenue of $2B (in-line). Hospira (HSP) is hoisted to Strong Buy from Outperform at Raymond James. Cubist Pharmaceuticals Inc. (CBST) is upgraded to Outperform from Perform with a $37 target at Oppenheimer. In afternoon trading: Shares of AEterna Zentaris (AEZS) are up about 5%.
The Health Care Select Sector SPDR (XLV) traded at $34.15 at 4:00 PM on Wednesday, up 0.98% on the day – up 8.41% year-to-date.
Bank of America (BAC) plans to spin off BAML Capital Partners, its last large private-equity fund. The Justice Department is asking market participants about how a merger of NYSE Euronext (NYX) with Nasdaq OMX (NDAQ) or Deutsche Boerse (DBOEY.PK) would affect companies trying to raise money in the US. Nasdaq reported Q1 EPS of $0.61 (in-line) and beat revenue by $6M. Huntington Bancshares (HBAN) beat estimates by 2 cents. Fulton Financial (FULT) reported Q1 EPS of $0.17 (in-line). Wells Fargo (WFC) reported Q1 EPS of $0.67 (beating estimates). Sterling Financial (STSA) is boosted to Outperform from Market Perform at FBR Capital. HSBC Holdings PLC (HBC) is lifted to Overweight from Equal-Weight by Morgan Stanley. Park National (PRK) is now Buy from Neutral with an objective of $80 at Sterne Agee. In afternoon trading: Shares of Knight Capital Group (KCG) are up about 7.5% after beating estimates by 6 cents and revenue by $44M. Shares of CIT Group (CIT) are up about 7%.
The Financial Select Sector SPDR (XLF) traded at $16.01 at 4:00 PM on Wednesday, up 0.25% on the day – up 0.38% year-to-date.
Despite fears about what the success of tablets will do to demand for its PC semiconductors, Intel produced record earnings in Q1 2011 that destroyed estimates by 10 cents. Intel is also forecasting that Q2 revenue will beat predictions. Intel is upgraded to Outperform from Market Perform at FBR Capital with a new price objective of $27. IBM (IBM) beat earnings by 11 cents with revenue in-line with estimates. IBM also raised its full-year earnings expectation from $13 per share to $13.15, above a consensus $13.08. VMware (VMW) beat estimates by 6 cents. Revenue rose 33% to $844M compared with predictions of $815M. VMWare is predicting that Q2 sales will beat expectations also. Apple (AAPL) is due to release its fiscal Q2 results after the market closes today, with analysts predicting that EPS jumped 61% to $5.36 and revenue 73% to $23.3B. However, a major focus for the market will be how much the Japan earthquake has affected Apple's supply chain and demand for its products in the country. Cree (CREE) missed estimates by 2 cents, but beat revenue by $1.8M. Cree Inc. is cut to Sell from Hold at Kaufman Brothers with a new target of $29. Juniper Networks (JNPR) reported Q1 EPS of $0.32 (in-line) and revenue of $1.1B (in-line). Riverbed Technology (RVBD) beat estimates by a penny and revenue of $2M. Yahoo (YHOO) beat estimates by a penny with revenue in-line with estimates. Qualcomm (QCOM) is now Neutral from Underperform at Exane BNP Paribas with a target price of $56. Adobe Systems (ADBE) gets cut to Underperform from Mkt Perform at FBR Capital. Blackboard (BBBB) is cut to Neutral from Outperform at Robert W. Baird. In afternoon trading: Shares of TiVo (TIVO) are up nearly 35% after a US appeals court agreed that Dish Network Corp. (DISH) is violating a judge’s order to shut down parts of a digital-video recording service that infringe a TiVo patent. Shares of VMware are up about 13.5%.
The Technology Select Sector SPDR (XLK) traded at $26.12 at 4:00 PM on Wednesday, up 2.11% on the day – up 3.69% year-to-date.
AT&T (T) reported Q1 EPS of $0.58 (beating estimates). Telecom Italia (TI) is taken to Hold from Buy at the Royal Bank of Scotland. In afternoon trading: Actives: Shares of Sprint Nextel (S) are up about 0.6%. Shares of AT&T (T) are down about 0.6%. Shares of Level 3 Communications (LVLT) are down about 1.2%. Shares of Verizon (VZ) are up about 2%.
The NASDAQ Telecommunications Index (IXTC) traded at $223.17 at 4:00 PM on Wednesday, up 2.63% on the day – down 0.98% year-to-date.
Power company AES (AES) has agreed to buy DPL (DPL) for $3.5B in cash as part of a strategy of expanding its footprint in the midwest. The $30/share offer is a premium of about 9%. In afternoon trading: Actives: Shares of DPL are up about 9.1%, while shares of AES are up about 3.5%. Shares of Duke Energy (DUK) are up about 1.25%. Shares of PPL (PPL) are up about 0.8%.
The Utilities Select Sector SPDR (XLU) traded at $32.24 at 4:00 PM on Wednesday, up 1.29% on the day – up 2.87% year-to-date.
STOCKS DISCUSSED: ECA, KMI, GLNG, BPZ, ALB, CCK, JAG, AL, ETN, TXT, UTX, CSX, HUBG, URI, CNI, TRS, ALV, HBI, WYNN, LAMR, LL, MO, SAFM, SYUT, FARM, ELN, ISRG, SYK, HSP, CBST, AEZS, BAC, NYX, NDAQ, DBOEY, HBAN, KCG, FULT, WFC, STSA, HBC, PRK, INTC, IBM, VMW, AAPL, CREE, JNPR, RVBD, YHOO, QCOM, ADBE, BBBB, TIVO, DISH, T, TI, S, T, LVLT, VZ, AES, DPL, DUK, PPL
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